Alpine country standing tall in tough market conditions

Austrian Airlines Boeing 777

The Austrian market is a challenge, but despite the difficult conditions there was an increase in overall air cargo tonnage of more than four per cent in 2015.

Austrian Airlines, which is part of Lufthansa Cargo, has seen good growth, driven by its expanding network and fleet upgrades.

Lufthansa Cargo regional director for Austria, East and South East Europe, Turkey and Israel, Hasso Schmidt tells Air Cargo Week growth was driven by Innsbruck, Salzburg and Vienna and he expects more will follow: “The overall market situation remains challenging though. The addition of Shanghai to the Austrian Airlines network in the course of the year raises high expectations in terms of tonnage growth.”

Schmidt says Austrian, which offers bellyhold capacity on its network has seen tonnage rise two per cent so far in 2016, compared to the same period in 2015, which reflects the increasing capacity offered by Austrian due to their network expansion.

According to CASS data in 2016, Schmidt says the market’s main trade lanes out of Austria in descending order are to Chicago, Shanghai, Seoul, Los Angeles, Tokyo and Mexico City. For the group as a whole, those trade lanes are Chicago, Tokyo, New York, Dubai, Mexico City and Bangkok.

He says the market wide main trade lanes to Austria are Seoul, Hong Kong, Shanghai, Tokyo, Chicago and Los Angeles, while for Lufthansa Cargo those trade lanes are Tokyo, Chicago, Shanghai, Bangkok, Seoul and New York.

As for Austria itself, Schmidt notes: “On the export side we see general cargo, and pharmaceuticals products having a positive development. On the import side, it’s also pharmaceutical products having increased in the first two months of the year, compared to the same period in 2015.”

Austria is ideally located to grow its air cargo market further and Schmidt says the attractiveness of Vienna as a consolidation hub is further increased by Austrian’s expanding intercontinental network.

However, he notes: “But we also see with more and more intercontinental services operated to and from the neighboring countries in the Central and Eastern European region there is more direct uplift from there and less cargo trucked into Austria to be consolidated here. The previous ‘consolidation effect’ in Vienna as the closest airport with an intercontinental network therefore is decreasing.”

Schmidt feels gateways in Austria are geared for cargo growth and development, but a major barrier to growing the cargo business in Austria in his view, is the high airport costs.

As Austrian is part of Lufthansa Cargo, this has benefits for both. It gives Lufthansa a strong market position in Austria and Central Eastern Europe due to dedicated local teams, while the co-operation Schmidt says also generates synergies in relations to sales, cost efficiency, innovation and product diversity.

Austrian will continue to grow its network and in 2015 it added Colombo, Mauritius, Miami and Chișinău, while it sees great opportunities from a service started to Shanghai last month and routes to Hong Kong and Havana later this year.